and
industries more significantly than others. These events also adversely affect
the prices and liquidity of the Fund’s portfolio securities or other
instruments and could result in disruptions in the trading markets. Any of such
circumstances could have a materially negative impact on the value of the Fund’s
shares and result in increased market volatility. During any such events, the
Fund’s shares may trade at increased premiums or discounts to their net asset
value and the bid/ask spread on the Fund’s shares may
widen.
NEW
FUND RISK. The Fund is new and
has no performance history or assets as of the date of this prospectus. The Fund
expects to have fewer assets than larger funds. Like other new funds, large
inflows and outflows may impact the Fund’s market exposure, and in turn, the
Fund’s returns for limited periods of time.
NON-CORRELATION
RISK.
The Fund’s return may not match the return of the Index for a number of reasons.
The Fund incurs operating expenses not applicable to the Index, and may incur
costs in buying and selling securities, especially when rebalancing the Fund’s
portfolio holdings to reflect changes in the composition of the Index. The Fund
expects to effect a significant portion of creations and redemptions of the
Funds shares in cash, which would cause it to incur related costs and expenses.
In addition, the Fund’s portfolio holdings may not exactly replicate the
securities included in the Index or the ratios between the securities included
in the Index. Additionally, in order to comply with its investment strategies
and policies, the Fund portfolio may deviate from the composition of the
Index.
NON-DIVERSIFICATION
RISK.
The Fund is classified as “non-diversified” under the 1940 Act. As a result, the
Fund is only limited as to the percentage of its assets which may be invested in
the securities of any one issuer by the diversification requirements imposed by
the Internal Revenue Code of 1986, as amended. The Fund may invest a relatively
high percentage of its assets in a limited number of issuers. As a result, the
Fund may be more susceptible to a single adverse economic or regulatory
occurrence affecting one or more of these issuers, experience increased
volatility and be highly invested in certain
issuers.
NON-U.S.
SECURITIES RISK. Non-U.S. securities
are subject to higher volatility than securities of domestic issuers due to
possible adverse political, social or economic developments, restrictions on
foreign investment or exchange of securities, capital controls, lack of
liquidity, currency exchange rates, excessive taxation, government seizure of
assets, the imposition of sanctions by foreign governments, different legal or
accounting standards, and less government supervision and regulation of
securities exchanges in foreign countries.
OPERATIONAL
RISK. The Fund is subject
to risks arising from various operational factors, including, but not limited
to, human error, processing and communication errors, errors of the Fund’s
service providers, counterparties or other third-parties, failed or inadequate
processes and technology or systems failures. The Fund relies on third-parties
for a range of services, including custody. Any delay or failure relating to
engaging or maintaining such service providers may affect the Fund’s ability to
meet its investment objective. Although the Fund and the Fund's investment
advisor seek to reduce these operational risks through controls and procedures,
there is no way to completely protect against such
risks.
PASSIVE
INVESTMENT RISK. The Fund is not
actively managed. The Fund invests in securities included in or representative
of the Index regardless of investment merit. The Fund generally will not attempt
to take defensive positions in declining markets. In the event that the Index is
no longer calculated, the Index license is terminated or the identity or
character of the Index is materially changed, the Fund will seek to engage a
replacement index.
PREFERRED
SECURITIES RISK. Preferred securities
combine some of the characteristics of both common stocks and bonds. Preferred
securities are typically subordinated to bonds and other debt securities in a
company’s capital structure in terms of priority to corporate income, subjecting
them to greater credit risk than those debt securities. Generally, holders of
preferred securities have no voting rights with respect to the issuing company
unless preferred dividends have been in arrears for a specified number of
periods, at which time the preferred security holders may obtain limited rights.
In certain circumstances, an issuer of preferred securities may defer payment on
the securities and, in some cases, redeem the securities prior to a specified
date. Preferred securities may also be substantially less liquid than other
securities, including common stock.
PREMIUM/DISCOUNT
RISK.
The market price of the Fund’s shares will generally fluctuate in accordance
with changes in the Fund’s net asset value as well as the relative supply of and
demand for shares on the Exchange. The Fund’s investment advisor cannot predict
whether shares will trade below, at or above their net asset value because the
shares trade on the Exchange at market prices and not at net asset value. Price
differences may be due, in large part, to the fact that supply and demand forces
at work in the secondary trading market for shares will be closely related, but
not identical, to the same forces influencing the prices of the holdings of the
Fund trading individually or in the aggregate at any point in time. However,
given that shares can only be purchased and redeemed in Creation Units, and only
to and from broker-dealers and large institutional investors